Q.1 Toys-4-You operates a national chain of 86 retail toy stores. The company has a state-of- the art computerized accounting system. All sales transactions are recorded on electronic point of- sale terminals. These terminals are tied into a central computer system that provides the national headquarters with information about the profitability of each store on a weekly basis. Toys-4-You, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end, an aging of the accounts receivable produced the following five groupings: a. Not yet due... $500,000 b. 130 days past due .. .210,000 c. 31-60 days past due. 80,000 d. 61-90 days past due .15,000 e. Over 90 days past due. ..30,000 Total .. $835,000 On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group a, 1 percent; Group b, 3 percent; Group c, 10 percent; Group d, 20 percent; and Group e, 50 percent. The Allowance for Doubtful Accounts before adjustment at December 31 showed a credit balance of $11,800. Instructions a. Compute the estimated amount of uncollectible accounts based on the above classification by age groups. b. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. c. Assume that on January 10 of the following year, Toys-4-You learned that an account receivable that had originated on September 1 in the amount of $8,250 was worthless because of the bankruptcy of the client. Prepare the journal entry required on January 10 to write off this account. Marks 061